Friday, January 04, 2013

NO, THE PLATINUM COIN WOULD NOT BE POPULAR

Kevin Drum spends several hundred words explaining why it would not actually be legal for the Obama administration to mint a trillion-dollar platinum coin as an end run around GOP debt-ceiling blackmail. I agree that the courts would probably rule against the administration, but not for the reason Kevin gives. (He says the intent of Congress when it passed the law in question did not anticipate this.) I think the courts would rule against the administration for the usual reason:

Our federal courts are still Republican-dominated, and any GOP-appointed judge asked to rule on this would be a Scalia and say, "Up yours -- I don't like what you're doing, therefore it's a violation of the law's intent."

But that would apply only to Obama or another Democratic president. If, at some point in the past, a Democratic Congress had tried to hold up a debt-ceiling increase with Ronald Reagan or George W. Bush in the White House, and Ronnie or W had announced the production of a high-denomination coin (or some other end run around the evil Democrats), with the legal imprimatur of Ed Meese or John Yoo, centrist and right-wing pundits would swoon at the "cowboy" "boldness," and approval by the courts would be inevitable. But Obama had better not try it.

Personally, I like the idea of anything that circumvents wingnut hostage-taking -- but I don't think the public would go along. I really disagree with Mistermix:

... it's probably a big political win for Obama. At a the most common-sense level, people can see how stupid the whole debt ceiling hostage taking is, and with Congress' popularity hovering between anal warts and communism, Obama's use of a technicality to get out of a hostage crisis would make him look like a problem solver.

This isn't like raising taxes on the rich, which most Americans now regard as a matter of simple fairness. Americans hate government debt and deficits. They hate the notion of the government spending borrowed money because they've been conditioned -- by Democrats as well as Republicans -- to see government budgeting as analogous to personal budgeting; they know that when they have less, they ought to spend less. No politician in America ever explains to the public that money borrowed by the government, like money borrowed by companies, can actually be productive -- no one says that it can create wealth if it's spent wisely. Sometimes, of course, that's true of individuals as well -- if you're out of work and you borrow money to pay for education that leads to a new, good-paying job, that was money well spent. But no politician ever offers that analogy to the public. So the public thinks: Broke? Spend less. And the platinum coin would seem like a sneaky way to evade that apparent necessity. I wish that weren't the case, but it is, until someone finds a way to argue persuasively for Keynesianism, in plain language the public can understand.

12 comments:

The plain language would be: Without this, you lose your Social Security and Medicare. That's easy to understand. Without this, we're shutting down the air force base in your town. Again, easy to comprehend.

This kind of deserves an entire post but I'll put it here. The Debt Ceiling crisis is not and never has been about the Costs of running this country. The costs are the costs. Congress has run up the bills, like a fat man sitting down to a huge meal, and now is trying to run out on the bill because he doesn't like the way his clothes look on his chubby thighs.

If the Republican Congress wants to bring down the debt or do anything else to lower the costs of doing business--in this metaphor eating in restaurants--they can either go on a diet, stop eating out, or do something else. What they don't get to do is retroactively refuse to pay the bill for a meal they have just eaten.

The only reason the Republicans are restorting to grandstanding and refusing to pay the bills is that they are attempting to use the paying of the bill as a moment to negotiate a lower cost for the next meal and hoping to force the costs of service/food onto the waiter and the restaurant. If Congress wants to cut future bills they can do that by choosing not to authorize new spending--they can cut medicare, they can pass new laws preventing monies from eing spent--hell they did it with Obama's attempt to close gitmo by refusing him the money to transfer and try the prisoners--but they don't want to do it uniltaterally.

They are taking the debt ceiling and the full faith and credit of the US hostage in order simply to force the Democrats to cut needed government spending on social programs so that their own voters don't get pissed at them.

If the Democrats refuse to go along the credit of the US might be destroyed but the social programs will not be cut. That is: its a gamble with a downside. If the Republicans go through and shoot the hostage its going to cost us something as a going concern internationally, in terms of debt repayment and credit going forward. The Republicans may feel they benefit from going through with shooting the hostage because...well...they like to wallow in blood and they don't care who gets hurt.

As for the subsidiary question of whether the platinum coin would be popular or not--no one would care five minutes after the debt ceiling votes were off the table as an issue. Americans don't pay the slightest attention to what congress is voting on on a daily basis. They have almost zero grasp of what their government costs or where the money actually goes. If we didn't have the debt ceiling as something the republicans were fighting about and propagandizing 0 percent of the public would have the faintest idea about how we borrow money to make the government function.

It doesn't have to be popular, Steve, it only has to be more popular than the GOP's constant hostage-taking.

Congress's approval rating is in single digits, while Obama's is north of 50%. I think things look good for the platinum coin option as a bargaining chip -- especially if he offers to close the loophole if Congress agrees to end the debt ceiling silliness.

I'm not convinced that this would be more unpopular than GOP hostage-taking, which, in this case, sounds like a reasonable plea to cut spending.

The problem is, everyone in America "knows" that a huge percentage of federal spending is waste. It doesn't matter that that's not true (or that one person's waste is another person's, say, vital defense expenditure) -- every ordinary citizen "knows" this. And this pseudo-fact makes people furious. I still say you need to persuade Americans that government spending is reasonable under the circumstances. And that's a tall order.

A reasonable plea to cut spending cannot come from the group that wrote the spending bills. All Obama needs to do is repeatedly point out that Congress had their chance to cut spending when they wrote the initial legislation, and that welshing on the bill when it comes due is not fiscally responsible.

The Fat Man analogy is gonna' get sprung on a Tea Bagger tonight. I felt kinda' bad the first time I made fun of a Tea Bagger (yes, at four thousand feet above sea level just forty miles from what were once prolific glaciers close enough to the forty-fifth parallel to call it half way to the North Pole it get cold around here: it's Winter) but now I'm kind of enjoying myself. Use a teachable moment to mock them and They Get It... no arguement.

It would be far more ironic were the imprint of Ronald Reagan, but Victor's is by the far most apt.

Ten Bears,No coin face value equals it's weight in the precious metal. In fact they must be less value than their face value to cover the cost of manufacture administration etc. i.e. the gold standard went years back. It could conceivably be pentagonal shaped or a pentagram to signify the hocus pocus (magic) of capitalism's primary concept of infinite consumption in a finite world. But it would be wise to make the coin too big to carry in pocket book. The government ("damagement"?) could give it to China for all its debts then a week later pass a bill like the one for the silver dollar removing it from legal tender without compensation. Problem solved no more debt and China goes broke and all things Chinese would be cheaper still!! :-) Simple really maybe I can sell the idea to the Tea Baggers ?